The Scarlet Extended case
In the recent Scarlet Extended case, the ECJ reiterated the position taken in the Promusicae case and went further in clarifying the meaning of other fundamental rights in the telecommunications sector. The case dealt, inter alia, with the question of whether the obligation on ISPs to monitor and block content infringing copyrights violates the consumers’ fundamental rights.
This case concerned the dispute between Scarlet Extended SA, an Internet service provider, and SABAM, a management company responsible for authorizing the use of copyright-protected musical works by third parties. When SABAM established that users of Scarlet’s services were downloading works in SABAM’s catalogue by means of file-sharing software, it sought a court order requiring Scarlet to bring such infringements to an end. In response, Scarlet claimed that such an obligation to monitor communications on its network is incompatible with the directive on electronic commerce and with fundamental rights.
The Court affirmed that the imposition on ISPs to conduct a general monitoring task of Internet traffic is prohibited by Article 15(1) of Directive 2000/31 on electronic commerce. Moreover, while recognizing that the right to intellectual property is protected by Article 17(2) of the Charter, the Court clarified that this right is not absolute. On this, it stated that there is ‘nothing whatsoever in the wording of that provision or in the Court’s case law to suggest that that right is inviolable and must for that reason be absolutely protected’.
Furthermore, referring to the Promusicae case, the Court held that the rights of copyright holders, which are IP rights protected by Article 17(2) of the Charter, have to be balanced with other fundamental rights. In particular, a fair balance has to be struck between the protection of intellectual property rights and the freedom to conduct a business enjoyed by operators (such as providing Internet services), pursuant to Article 16 of the Charter. The Court established that, in this case, the injunction requiring the ISP to install a complete filtering system ‘would result in a serious infringement of the freedom of the ISP concerned to conduct its business since it would require that ISP to install a complicated, costly, permanent computer system at its own expense, which would also be contrary to the conditions laid down in Article 3(1) of Directive 2004/48, which requires that measures to ensure the respect of intellectual property rights should not be unnecessarily complicated or costly’. Importantly, according to the Court, this injunction would infringe fundamental rights of consumers; in particular Article 8, regarding the protection of personal data, and Article 11 on the freedom to receive or impart information. First, requiring installation of a filtering system would infringe the right to data protection, as it would involve a systematic analysis of all content and the collection and identification of users’ IP addresses. Secondly, a filtering system could potentially undermine freedom of information since it might not distinguish adequately between unlawful content and lawful content. This may lead to the blocking of lawful communication.  Therefore, the Court concluded that requiring Internet service providers to install a filtering system to prevent IP-infringement ‘would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information, on the other’.
This case is interesting as it exemplifies how several fundamental rights may come into play in telecommunication-related cases. Moreover, it represents a landmark as the ECJ confirmed for the first time the fundamental freedom of consumers to receive or impart information in this context. This may well have an important impact on Internet-related regulation in Member States.
In a very similar case from 2012, SABAM v Netlog,74 the ECJ confirmed the decision taken in the Scarlet Extended case. The Court applied a similar reasoning regarding the balancing of intellectual property rights versus other fundamental rights, including protection of personal data and the freedom to receive information. In this case, the Court had to decide again on whether an online social network provider, Netlog, could be forced to install a general filtering system—under SABAM’s request. In this case too, the Court ruled that such a request would not allow a fair balance between the fundamental rights already mentioned in Scarlet Extended.
-  Case C-70/10, Scarlet Extended SA v Sotiete beige des auteurs, compositeurs et editeurs SCRL(SABAM) 24 November 2011, report not yet published.
-  Case C-70/10, Scarlet Extended SA v Sosiete beige des auteurs, compositeurs et SCRL(SABAM) 24 November 2011, report not yet published, para. 43.
-  Case C-70/10, Scarlet Extended SA v Societe beige des auteurs, compositeurs et editeurs SCRL(SABAM) 24 November 2011, report not yet published, paras 43-4.
-  Case C-70/10, Scarlet Extended SA v Societe belge des auteurs, compositeurs et editeurs SCRL(SABAM) 24 November 2011, report not yet published, para. 48.
-  Case C-70/10, Scarlet Extended SA v Societe beige des auteurs, compositeurs et editeurs SCRL(SABAM) 24 November 2011, report not yet published, paras. 51-2.
-  Case C-360/10, Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA (SABAM) vNetlog NV16 February 2012, not yet reported.